Pramerica Dynamic Fund Review

 

Pramerica Dynamic Fund Review

Pramerica Mutual fund has launched its new fund – Dynamic Fund. Let us review this fund. I mean let us discuss that what this fund basically offers?

Well, in Simple Layman’s language, it is a hybrid fund which will primarily invest both in equity and debt. Obviously, when it comes to investing in hybrid fund, the next obvious question comes and that is – How much asset allocation will be there?

Well, this fund claims that it will adjust its equity and debt allocation according to Pramerica DART.

Well, “Pramerica DART” is some kind of statistical algorithm which is based on statistics and several other things. The theory of mean reversion suggests that prices and returns will eventually move back towards the long-term average, in other words – what goes up, will eventually come down!

Thus, in very simple words, when its DART algorithm will tell that the market is over valued, it will book profits and invest in debt more and when the DART will tell that the market is under valued, it will invest more money in equity for higher gains.

In other words, it will invest 30-100% of your corpus in equity and rest in debt. But this allocation will be strictly determined by DART algorithm so there are no chances of any human bias.

Should You Invest in this Fund?

NO. The simple one word answer is NO. This is because this kind of algorithm don’t have any past record of proven performance anywhere around the world.

In 2006-07, one such kind of algorithm based fund came which was LOTUS INDIA AGILE Fund. This was a Quantum based fund. And this fund was a complete disaster.

They claimed that by their AGILE algorithm, they will crush the market but instead of crushing the market, they crushed the wealth of investors…!!!

So better to invest in Vanilla (Equity Diversified) Funds rather than such kind of fancy funds.